For many, these are
scary economic times as the value of homes and investments declines. Adding to
the anxiety, property tax bills are arriving in mail boxes across the state.

Fortunately, as a direct
result of Proposition 13, which limits increases in a property’s assessed value
to two percent annually, most property owners have a good idea what their bill
will be even before opening the envelope. Still, the Howard Jarvis Taxpayers
Association recommends that taxpayers carefully examine their latest property
tax bill. Although not common, assessors do make mistakes.

Taxpayers should
understand the various charges and make certain that they are not being dunned
for more than they are legally obligated to pay. The best way to check a tax
bill is to have your previous year’s bill handy for reference.

Checking the bill is
especially important for those who bought their homes within the last five
years at the height of the market. If the current home value is actually lower
than the assessed value shown on the tax bill, the owner is entitled to file
for a reduction in the tax bill.

Typically, the property
tax bill will show three categories of charges. They are the General Tax Levy,
Voted Indebtedness, and Direct Assessments.

General Tax Levy The
General Tax Levy is what most people think of when talking about property
taxes. It is based on the assessed value of land, improvements and fixtures.
This charge usually makes up the largest part of the tax bill and it is the
amount that is limited by Proposition 13.

Proposition 13, passed
overwhelmingly by voters in 1978, established a statewide uniform tax rate of
one percent of assessed value at the time of purchase and limited annual
increases in assessed value to no more than two percent. From a practical
standpoint, this means that once the base year value of your property is
established, the General Tax Levy cannot be increased more than two percent
each year. This allows all property owners to predict their property tax bills
into the future and budget accordingly.

The best way to check to
make sure that your current General Levy of Assessment is correct is to compare
it with the previous year’s bill. The increase should be no more than two
percent unless there have been improvements to the property like adding a room
to the house.

This bears repeating:
Because of the current decline in property values in California, many recent
homebuyers are entitled to a reduction in their property tax bill to an amount
even lower than their home’s Proposition 13 adjusted base value. Although the
reduction is temporary — taxes will go up again when the property regains value
— the savings are permanent.

If in doubt about the
current value of your property, check sales of comparable homes in your
neighborhood. If homes like yours are selling for less than the valuation on
your latest bill, contact your county assessor and ask that the value and
resulting tax be adjusted to reflect true current value.

Voted Indebtedness
Voted Indebtedness is made up of those bonds and per parcel taxes approved by
the voters.

Local general obligation
bonds for libraries, parks, police and fire facilities and other capital
improvements are repaid exclusively by property owners. Because a minority of the
population is required to pay the entire amount, the California Constitution of
1879 established the two-thirds vote for approval of these bonds. This assures
a strong community consensus before obligating property owners to repay debt
for 20 or 30 years.

Until the year 2000,
local school bonds also required a two-thirds vote, but the passage of
Proposition 39 — backed by a small group of wealthy Silicon Valley businessmen
— lowered the vote to 55 percent. Because the 55 percent requirement guarantees
that most school bonds will pass, regardless of merit, many homeowners are
seeing a significant increase in the Voted Indebtedness column on their tax
bills.

Less common than bonds
are per parcel taxes. These are taxes on property ownership, not on property
value. Under Proposition 13, they require a two-thirds vote and are also listed
either under Voted Indebtedness if they are being imposed to repay bonds or
under “Other Levies” if they are for operational expenses of a local government
entity.

Direct Assessments
Ironically, under the system in place for over a century, property taxes go
into the general fund and are used for local services unrelated to property.
For services to property, such as sidewalks and sewers, we pay extra. These
charges are known as direct assessments.

Because of Proposition
218 — the Right to Vote on Taxes Act, placed on the ballot by the Howard Jarvis
Taxpayers Association in 1996 — property owners must be given a meaningful say
in approving new assessments. Before an assessment can be imposed, or
increased, property owners must be informed in writing and be given the
opportunity to cast a protest vote on the new assessment or assessment
increase.

If you have a question
about your property tax bill you should contact the office of your county
assessor. It’s your money and you have a right to be certain that your bill is
correct.

(The writer is an
attorney and president of the Howard Jarvis Taxpayers Association.)